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3232How electric vehicles are driving changehttps://www.lexblog.com/2018/12/04/how-electric-vehicles-are-driving-change/
Tue, 04 Dec 2018 15:15:15 +0000https://www.lexblog.com/2018/12/04/how-electric-vehicles-are-driving-change/The demand for electric cars is rising. In 2011, only 1,000 electric vehicles were sold in the UK. In 2018, this number increased to 485,000, with a new electric vehicle being registered with the DVLA every 3.6 seconds, and whilst only 3-4% of all vehicles are now plug in, this figure is expected to be 10% by 2020.

Why is the market for electric vehicles expanding so rapidly? Arguably the most important reason is that consumers are increasingly concerned about climate change and air pollution and are adapting their spending patterns accordingly. However, although electric vehicles are a more environmentally friendly alternative to petrol cars, the market continues to lag behind the traditional automotive sector for a number of reasons

1. “Range Anxiety”

One of the most significant concerns of consumers is that they won’t be able to find a charging point when they need one and so their electric vehicle will run out of charge mid-journey. Whilst in reality this is unlikely, owing to the large and ever improving capacity of the batteries powering electric vehicles, until consumers get used to the technology and feel assured that they will be able to charge their cars whenever they need to, electric vehicles are unlikely to be used on a mass scale.

Of course, this means an enormous investment in charging infrastructure in residential areas (it is estimated that about 56% of charging will take place at home), workplaces and destinations such as retail parks and shopping centres. However, it is not as straightforward as just increasing the availability of charging points. A number of issues need to be considered including: the right connectors for different fleets; the right speed of charge; and how the vehicle owner will pay for use of the charging point.

Dwell time also needs to be factored in. “Quick-charge” points for short stops at petrol station type venues will be essential to tackle range anxiety. Equally, if slower speed charging points are installed at shopping centres and retail parks, range anxiety could be capitalised on to increase both footfall and dwell time and to encourage customer spend.

2. Grid connection

Particularly in urban areas, the uptake of electric vehicles on a mass scale will put strain on grid infrastructure. As things like lighting and appliances are anticipated to become more efficient, and the use of renewable energy increases, there is likely to be some surplus capacity in the power system so in aggregate, electric vehicle adoption will probably keep the supply/demand ratio for power flat, rather than increasing it. However for this to be the case and to avoid costly upgrades in grid infrastructure, we need to improve how we manage the energy we already generate and continue to invest in renewables.

3. Reliability of technology

Service levels and the reliability of the technology are critical too. Battery storage and battery degradation contribute to range anxiety and also lead to rapid product redundancy. This means many consumers do not feel confident using an electric vehicle, or will want to wait until they feel the technology is proven before making the leap from the traditional combustion engine.

At present batteries represent 40% of the cost of an electric vehicle and increasing the storage capacity and lifespan of a battery is extremely expensive on a large-scale. The majority of electric vehicles are therefore small cars; logistics vehicles are lagging behind because of their weight and the distances they travel.

However, hopefully this issue will soon be resolved as manufacturers are investing heavily in improving batteries and expect to develop a battery that can power an SUV in the next year. This in turn should help overcome range anxiety and lessen pressure on the grid by reducing the regularity of charging.

4. Barriers to entry

The costs of investing in infrastructure, batteries and other associated technologies are currently all being passed on to consumers, so electric vehicles are, for now, unaffordable for many. However price parity between electric vehicles and traditional vehicles is expected by 2022, and once it becomes cheaper to own and operate an electric vehicle rather than one with an internal combustion engine, we can expect to see their take up surge.

Other issues to consider are insurance and maintenance (whilst electric vehicles have 10% fewer moving parts, a more qualified electrical engineer is required to repair them). Even if electric and non-electric vehicles are the same price, in order for consumers to perceive the electric vehicle as the better buy, they need to feel that once they have purchased the vehicle it will not be more difficult to maintain than a traditional car.

By 2040 all vehicles sold in the UK must be zero emissions, so a mass adoption of electric vehicles seems almost inevitable. However, a distinction needs to be drawn between urban, suburban and rural areas. In the short term, electric vehicles are most likely to be used in urban areas where shorter distances are driven, there are more charging points and there is greater pressure to reduce emissions. Whilst electric vehicles are on the cusp of becoming mainstream in cities and large towns, it will likely take longer for them to become commonplace in rural areas where we will may continue to see traditional car ownership in the medium to long term.

The British Property Federation has commissioned a report, Lost in translation: How can real estate make the most of the PropTech revolution, which considers the opportunities and challenges posed by PropTech to the real estate sector.

Authored by Future Cities Catapult, the report notes that there is a strong correlation between digitisation and productivity. While real estate is not the least digitised economic sector, there is “significant untapped potential” and opportunities remain. Indeed, if the sector modernises and embraces PropTech, there is the possibility of transforming the economy through new ideas for property and its functions; better buildings for people to work, live and play in and for businesses to thrive in; improved infrastructure; and more prosperous communities.

Disruptive digital technology is already beginning to change the traditionally “safe and steady” property sector. The report highlights the current trends towards:

• more flexible use of space in buildings;
• a more service-based approach to property;
• use of sensors to provide information on building use and provide feedback to developers and architects;
• virtual replicas of buildings as a tool to improve design and operation; and
• more adaptable buildings that can cater for uncertain future uses.

With these trends only set to continue, the report makes a number of recommendations as to how the sector as a whole should respond to the technological revolution, including:

• improving market information by creating a PropTech library documenting all current and emerging PropTech innovation as well as developing property innovation and PropTech maturity indices to give the market a clearer understanding of a business’s capacity and preparedness for innovation/tech as well as the innovations it should be adopting;

• creating a cohesive approach to championing innovation across the property sector with the property industry, government and other key strategic organisations setting up a property sector regulatory sandbox and a property passport with common data standards for core information; and

• embedding digital knowledge and fostering innovative behaviours by building a leadership development course with an overview of technologies driving digital innovation and developing a programme to put early career software developers, engineers, designers and innovators in influential roles in property businesses.

The BPF has launched a technology and innovation group to implement these recommendations. The group will be led by Andy Pyle, UK head of real estate at KPMG, and includes co-founder, James Dearsley, amongst others.

James Dearsley will be the keynote speaker at the Hogan Lovells’ PropTech Decoded event on Thursday 4 October 2018. If you want to attend the event and find out more about what PropTech means for you and your business then contact Lauren.Boyle@hoganlovells.com.